Further Reading

"The impact on customer bills is always hard to quantify. We're certainly not promising that customer bills are going to go down or even increase less rapidly," Comcast Executive VP David Cohen said in a conference call today in response to a question on price. "Frankly, most of the factors that go into customer bills are factors beyond our control."

Cohen didn't elaborate on those "factors beyond our control," but he said the promised benefits to consumers will come via "quality of service, by quality of offerings, by technological innovations." Finally, Cohen said, "I don't believe there's any way to argue that [consumers are] going to be hurt from a price perspective as a result of this transaction." Presumably then, prices would continue to take their natural path regardless of whether the transaction is approved by US regulatory authorities.

The $45.2 billion merger will get scrutiny from the Federal Communications Commission and Department of Justice. Senators will also weigh in.

“This proposed merger could have a significant impact on the cable industry and affect consumers across the country,” Sen. Amy Klobuchar (D-MN) said in a statement quoted by several media outlets. “As chair of the Senate Antitrust Subcommittee, I plan to hold a hearing to carefully scrutinize the details of this merger and its potential consequences for both consumers and competition.”

Copps: Kill the deal

Michael Copps, an FCC commissioner from 2001 to 2011 who now leads the Media and Democracy Reform Initiative at Common Cause, said the merger is "so over the top that it ought to be dead on arrival at the FCC."

Copps was the only commission member to vote against the Comcast/NBC Universal merger in 2011.

"I thought the Comcast/NBCU merger was beyond the pale," Copps told Ars. "I was just stunned to see a couple years later they come back and they have $45 billion to pick up the second largest cable company."

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns, but Copps isn't buying that argument.

"I think we need to look at it in the context of the one big media ecosystem we have in this country, which is broadband, broadcast, old media, and new media, and you have one player, one power that you're according massive influence and gatekeeping control, and that's just plain bad for consumers and just plain bad for democracy," he said.

Copps said the merger could give companies seeking to buy advertising less choice and could harm journalism.

"Journalism has suffered tremendously as a result of all this consolidation in the newsroom, cutbacks that seem to follow so many of these transactions, and that's bad news for our democratic dialogue and our civic dialogue and our ability to govern ourselves," he said.

Comcast said it hopes to complete the transaction by the end of the year. Cohen characterized negative reaction to the deal as "hysteria."

"Putting these two companies together will not deprive a single consumer in America of a choice he or she will have today," he said.

"The reason this deal is scary is that for the vast majority of businesses in 19 of the 20 largest metropolitan areas in the country, their only choice for a high-capacity wired connection will be Comcast," Crawford wrote on Bloomberg today. "Comcast, in turn, has its own built-in conflicts of interest: It will be serving the interests of its shareholders by keeping investments in its network as low as possible—in particular, making no move to provide the world-class fiber-optic connections that are now standard and cheap in other countries—and extracting as much rent as it can, in all kinds of ways. Comcast, for purposes of today's public, is calling itself a 'cable company.' It no longer is. Comcast sells infrastructure subject to neither competition nor a cop on the beat."

Net neutrality

As we noted earlier today, the deal would impose net neutrality obligations to Time Warner until 2018. That's because in order to complete the NBCUniversal merger, Comcast agreed to abide by the FCC's Open Internet Order for seven years, even if that order was overturned in court. The order's rules against ISPs blocking or discriminating against applications were overturned in a lawsuit filed by Verizon, but Comcast and Time Warner would still be bound by the rules for a few more years.

"We helped to negotiate the Open Internet Order, we had no problems with the Open Internet Order, we did not litigate to get rid of the Open Internet Order," Cohen said.

"One of my refrains whenever I talk to the press about this subject is it's hard enough to negotiate with the government, I'd rather not negotiate with the press as well as the government," he said. "We're confident we're going to have a negotiation with the government over this. We're very comfortable with the case we have."

Comcast promised to divest itself of three million subscribers to appease regulatory concerns over one company owning too much of the pay-TV market. Even with the divestitures, Comcast's subscriber base would balloon from 22 million to 30 million, a bit less than 30 percent of the overall market.

Cohen was asked which markets Comcast will give up in its divestitures, but he said that won't be decided until later in the process. Comcast executives "haven't had a single conversation about which systems might be divested," he said.

This just make me sick to my stomach. Where are the antitrust gov agencies these days. Do we actqually have that gov department anymore. It seems to me that under Bush, he did away with anything to do with antitrust. Bummer...We will lose....

Of course there's no promise, that's against their obligation to their shareholders. The press release statements was close to true. Yes, it becomes possible to improve their system, release new products quicker, and give a better customer experience with a merger. The problem is, why would they? The company's interest is in making more money. Why would they unnecessarily spend money, when they don't have to? They simply have to raise prices and do nothing. So why would a company that wants to take over another company decide to become benevolent and go against it's fundamental goal of making the most money it can?

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns.

You've got to admire the nerve they must have to actually use that as a defense. Big brass ones.

Can Ars please, please write an article on starting an ISP? I know it's hard, hard work, but the current situation just can't stand.

I've started one, and ran one for 7 years. There are too many details to cover in a reply, but one of the huge roadblocks to overcome is cost to get the cable in the ground. Labor and materials is only part of the cost, the franchise agreements and city permits are another. Unless you get in during greenfield construction, it is very difficult to overbuild an existing city infrastructure.

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns.

You've got to admire the nerve they must have to actually use that as a defense. Big brass ones.

Can Ars please, please write an article on starting an ISP? I know it's hard, hard work, but the current situation just can't stand.

I've started one, and ran one for 7 years. There are too many details to cover in a reply, but one of the huge roadblocks to overcome is cost to get the cable in the ground. Labor and materials is only part of the cost, the franchise agreements and city permits are another. Unless you get in during greenfield construction, it is very difficult to overbuild an existing city infrastructure.

Out of curiosity, how do you feel about the concept of just re-classifying last-mile (e.g. to home consumers) as common carriers? Or making the last-mile infrastructure be government maintained similar to roads/water/power that ISPs peer up with to provide service to individual customers? Anecdotally, it seems most of us here at Ars like that idea, but as someone with actual real experience running an ISP, is it truly viable? Is it a great idea?

How so? It's true. Their monopoly powers do not grow via the merger and there's nothing anti-competitive about it -- unless one of them already has plans to move in on the others market, though this is basically impossible with the current infrastructure.

Yes. They are saying "We are already a cartel that avoid direct competition through a variety of methods, so nothing we do can be any worse"

This just make me sick to my stomach. Where are the antitrust gov agencies these days. Do we actqually have that gov department anymore. It seems to me that under Bush, he did away with anything to do with antitrust. Bummer...We will lose....

Explain how this would violate any antitrust laws, or even help them with future potential violations. Keep in mind that monopolies are not inherently illegal and are not even inherently "bad" -- it's abuse of monopoly powers that is regulated.

It's Economics 101 that it would be foolish to not maximize all profit potential in the instance of monopoly. The lack of one more viable competitor with Comcast refutes the "not anti-competitive" claims Comcast makes. This merger gives them no intelligent business move other than avoiding infrastructure improvements and increasing prices simply because they can.

"The impact on customer bills is always hard to quantify. We're certainly not promising that customer bills are going to go down or even increase less rapidly," Comcast Executive VP David Cohen said in a conference call today in response to a question on price. "Frankly, most of the factors that go into customer bills are factors beyond our control."

Cohen didn't elaborate on those "factors beyond our control," but said the promised benefits to consumers will come via "quality of service, by quality of offerings, by technological innovations."

Of course, they can't make any promises that the efficiencies they are claiming will arise will affect anything directly quantifiable. It's the qualitative properties that will improve. Like technological innovations, we can't measure how much better that will be with their merger, but they assure us it will be!

They will make any number of promises on things that cannot be verified later. But no guarantees on anything someone could actually measure.

"Putting these two companies together will not deprive a single consumer in America of a choice he or she will have today," he said.

I'm so depressed that he's exactly right about this, but I'd like to rephrase it:

"You people already don't have a choice. So what if we buy TWC? You still won't have a choice. See how we didn't deprive you of the choice you already don't have?"

This is technically true, but the home user isn't their only customer. Current cable and internet rights agreements don't extend in perpetuity. They occasionally come up for renewal. And when they do, Time Warner Cable will no longer be around to challenge Comcast for those agreements. Put a different way, municipalities that grant cable company monopolies will have less choice than they do today. So yes, consumers will ultimately suffer.

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns.

You've got to admire the nerve they must have to actually use that as a defense. Big brass ones.

How so? It's true. Their monopoly powers do not grow via the merger and there's nothing anti-competitive about it -- unless one of them already has plans to move in on the others market, though this is basically impossible with the current infrastructure.

* Let's take this pro argument to the extreme and say that Comcast owns both Time Warner and Charter.- To understand imo why a total cable merger is anticompetitive, a person should look at the cities/counties that contract with cable companies to provide local monopolies.1. Comcast has some of the worst internet speeds.And let's say Comcast increases the price of certain channels like ESPN which competes with the NBC sports channels (owned by Comcast). 2. And let's say a city/county wants to change cable companies because of Comcast's lousy / expensive service. 3. Comcast/Time Warner/Charter cover almost all of the US. * If they were all one company the cities/counties would be stuck with lousy service / higher prices because Comcast would have an almost total monopoly.

* Let's look at the Comcast / Time Warner merger and explore Charter as a competitor. Even if cities / counties wanted to switch to Charter, because it is a much smaller company, Charter could not step in quickly to take over the rest of the US. - Nope, Comcast / Time Warner would be an entrenched monopoly and would be able to put more pressure and have more influence on local governments to keep bad / more expensive service.

I have long been very annoyed with how there is very little competition for cable/internet in the various markets in this country. If I want cable, it's either Comcast or Dish. If I want internet, it's either Comcast or U-verse (or DSL). While some would say that is competition, it doesn't feel like it because they are working on different technologies. The cable internet just runs faster. Currently, there's nothing pushing better and better service in various areas, so the only thing keeping providers in check is government/public scrutiny and bad press. This won't last forever.

I think that cable lines should be government owned and leased to ISPs. However, there is no will or money to buy up all the lines. That's why the fiber optic lines going in around the country are so interesting. Many are being put in by local government, and of course the local internet providers are having a fit because all they can do it lay their own line and compete or rent the government lines. (like I think they should)

The whole industry needs more competition so that we get better deals, better service, and better pricing.

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns.

You've got to admire the nerve they must have to actually use that as a defense. Big brass ones.

Can Ars please, please write an article on starting an ISP? I know it's hard, hard work, but the current situation just can't stand.

I've started one, and ran one for 7 years. There are too many details to cover in a reply, but one of the huge roadblocks to overcome is cost to get the cable in the ground. Labor and materials is only part of the cost, the franchise agreements and city permits are another. Unless you get in during greenfield construction, it is very difficult to overbuild an existing city infrastructure.

"Hey, guys, don't be mad. I mean, it won't increase competition, there's no incentive to upgrade any of our infrastructure, we won't need to improve our service, and your bills are still gonna increase, but this is TOTALLY gonna be great for our customers! And by 'our customers' I really "our shareholders' wallets.'"

I love how Comcast is so confident they'll get away with this that they're just completely brazen about telling everyone how screwed they are.

“This proposed merger could have a significant impact on the cable industry and affect consumers across the country,” Sen. Amy Klobuchar (D-MN) said in a statement quoted by several media outlets. “As chair of the Senate Antitrust Subcommittee, I plan to hold a hearing to carefully [b]hold up the merger until you buy me off with a cushy seven figure salary for doing basically nothing for the consumers I'm supposed to protect”

This just make me sick to my stomach. Where are the antitrust gov agencies these days. Do we actqually have that gov department anymore. It seems to me that under Bush, he did away with anything to do with antitrust. Bummer...We will lose....

Explain how this would violate any antitrust laws, or even help them with future potential violations. Keep in mind that monopolies are not inherently illegal and are not even inherently "bad" -- it's abuse of monopoly powers that is regulated.

For one, the use of a monopoly in one market (the provision of cable service to various individual municipalities) to establish a B-2-B monopoly in a separate but related market (the distribution of cable channels).

This is 100% within the realm of the Sherman Anti-Trust act and its legislative and judicial progeny. The only question is if the B2C and B2B markets are seen as separate. You can argue that they are not, but logic dictates (and Comcast's rationale for this merger confirms) that the primary difference between the current state of affairs and a future post-merger state of affairs is that Comcast-TWC will have almost absolute bargaining power versus the networks who provide content.

Comcast argued that the deal isn't anti-competitive because Comcast and Time Warner don't compete against each other for cable and Internet subscribers in any individual cities or towns.

You've got to admire the nerve they must have to actually use that as a defense. Big brass ones.

Can Ars please, please write an article on starting an ISP? I know it's hard, hard work, but the current situation just can't stand.

I've started one, and ran one for 7 years. There are too many details to cover in a reply, but one of the huge roadblocks to overcome is cost to get the cable in the ground. Labor and materials is only part of the cost, the franchise agreements and city permits are another. Unless you get in during greenfield construction, it is very difficult to overbuild an existing city infrastructure.

I'm having a little trouble understanding how this is supposed to be good for consumers if they are saying that prices won't go down or if it doesn't slow the rate increases. I doubt it would be more channels for customers, so what benefit will they be getting?

Because $60 a month for censored and filtered 5mbps down and 0.5mbps up is totally consumer friendly, right?

You forgot capped.

I'm glad to see forces starting to align against the merger. I've said it before, and I'll say it again. I have Time Warner now and while I do not like Time Warner they're the second best ISP I've ever had. I've had 7 technicians out and been through 4 modem replacements in 14 months. I've made 24 calls for loss of service, and lost service about 30 times. I find Time Warner's prices for cable ridiculously high $30 extra to bundle 20 channels some of which I suspect pay Time Warner for service. (I subscribe to Netfix for $8 and watch what I please when I please) That said Comcast was worse. I paid for business class service with them, $140 a month for the exact same service they provided a residence next door to my office for $35. It took them 4 installation attempts to install the cable properly, and they never had the right tools for the job. I lost service more than 10 times in five months and went through 2 modems. Now that I've moved my business to a location they serve but refuse to install at (even for their customary $300 business install fee) they insist I owe them $700 for service they refused to provide.

Wide Open West of WOW was the best ISP I ever had doing a costly install free and they had 3 outages in 18 months of service with no need for modem or box swaps.

This deal would be bad for me, and bad for competition. I believe it would lead to stagnation in the already poorly functioning ISP market in the USA. Further I use 1TB worth of data on a 15/1Mb line and Comcast would want to cap that at 250GB. I'm not a glutton, that number I expect could be more than 2TB.Time Warner has been good to it's users not turning over private info such as IP address without a proper court order, and not throttling services.

Time Warner has tried caps before and only backed down because their financial statements showed more data delivered for less cost per unit of data and less cost overall than the year before, thereby showing them to be liars when they said caps and overages were financially necessary. I'm certain under Comcast we'd see caps.